Question 1

Which statement best describes the consequences of open-market sales conducted by the Bank of Canada?

Accepted Answer

A)  Bank reserves increase,and the money supply increases. 
B)  Bank reserves increase,and the money supply decreases. 
C)  Bank reserves decrease,and the money supply increases. 
D)  Bank reserves decrease,and the money supply decreases. 
A)  Bank reserves increase,and the money supply increases. 
B)  Bank reserves increase,and the money supply decreases. 
C)  Bank reserves decrease,and the money supply increases. 
D)  Bank reserves decrease,and the money supply decreases.

Question 2

Table 10-3
The following information pertains to the Bank of Kamloops.  
-Refer to the Table 10-3.If the Bank of Kamloops has loaned out all the money it wants,given its deposits,what is its reserve ratio?

Accepted Answer

A)  1 percent 
B)  5 percent 
C)  10 percent 
D)  15 percent 
A)  1 percent 
B)  5 percent 
C)  10 percent 
D)  15 percent

Question 3

The bank of Hinton has $100 reserves,$10,000 long-term loans,$500 securities,$8800 deposits,and $1400 debt.Due to a macroeconomic slowdown,many people lose their jobs and need to live off their savings for a while.Discuss the possible effects of this situation on the bank of Hinton's assets,liabilities,and capital.Is the bank insolvent? Use numerical examples to illustrate your points.

Accepted Answer

If people use their savings,they withdra

Question 4

Suppose the public decides to hold more currency and fewer deposits in banks.Which statement describes the effects of this decision?

Accepted Answer

A)  Bank reserves decrease,and the money supply eventually decreases. 
B)  Bank reserves decrease,but the money supply does not change. 
C)  Bank reserves increase,and the money supply eventually increases. 
D)  Bank reserves increase,but the money supply does not change. 
A)  Bank reserves decrease,and the money supply eventually decreases. 
B)  Bank reserves decrease,but the money supply does not change. 
C)  Bank reserves increase,and the money supply eventually increases. 
D)  Bank reserves increase,but the money supply does not change.

Question 5

Which statement best defines reserve requirements?

Accepted Answer

A)  They are regulations concerning the amount banks are allowed to borrow from the central bank. 
B)  They are regulations concerning the amount of reserves banks must hold against deposits. 
C)  They are regulations concerning reserves banks must hold based on the number and type of loans they make. 
D)  They are regulations concerning the interest rate at which banks can borrow from the central bank. 
A)  They are regulations concerning the amount banks are allowed to borrow from the central bank. 
B)  They are regulations concerning the amount of reserves banks must hold against deposits. 
C)  They are regulations concerning reserves banks must hold based on the number and type of loans they make. 
D)  They are regulations concerning the interest rate at which banks can borrow from the central bank.

Question 6

What is the difference between commodity money and fiat money? Why do people accept fiat currency in trade for goods and services?

Accepted Answer

Commodity money has "intrinsic value," o

Question 7

During the early 1930s,there were a number of bank failures.What did this do to the money supply? The central banks advocated open-market purchases.Would these purchases have reversed the change in the money supply and helped banks? Explain.

Accepted Answer

Bank failures cause people to lose confi

Question 8

In order to support the Canadian dollar,the Bank of Canada buys an amount of Euros from some major commercial Canadian banks (a type of operation the Bank of Canada rarely undertakes).
a.What is the immediate and the long-term impact of this operation on the money supply?
b.If the Bank of Canada does not wish that the currency swap influence the money supply,what does it have to do?

Accepted Answer

a.Since the purchase is from major comme

Question 9

Why was changing of reserve requirements phased out as a tool used by the Bank of Canada to control the money supply?

Accepted Answer

A)  to make the rules the same for all financial institutions since only credit unions were required to hold reserves 
B)  to make the rules the same for all financial institutions since only commercial banks were required to hold reserves 
C)  because Canada was the only country still imposing reserve requirements on its financial institutions 
D)  because the Bank of Canada was using it too frequently,causing disruption in the banks 
A)  to make the rules the same for all financial institutions since only credit unions were required to hold reserves 
B)  to make the rules the same for all financial institutions since only commercial banks were required to hold reserves 
C)  because Canada was the only country still imposing reserve requirements on its financial institutions 
D)  because the Bank of Canada was using it too frequently,causing disruption in the banks

Question 10

Bottles of very fine wine have less liquidity than demand deposits.

Accepted Answer

A) True 
 B)False

Question 11

When Arnold uses dollars to record his income and expenses,how is he using money?

Accepted Answer

A)  as a unit of account 
B)  as a means of payment 
C)  as a store of value 
D)  as a medium of exchange 
A)  as a unit of account 
B)  as a means of payment 
C)  as a store of value 
D)  as a medium of exchange

Question 12

Since 1994,what was phased out as a tool used by the Bank of Canada to control the money supply?

Accepted Answer

A)  changing reserve requirements 
B)  changing the overnight rate 
C)  open-market operations 
D)  foreign exchange market operations 
A)  changing reserve requirements 
B)  changing the overnight rate 
C)  open-market operations 
D)  foreign exchange market operations

Question 13

If currency is $50 billion,chequable deposits $700 billion,other minor,less liquid categories $300 billion,and credit card debt $500 billion,how much is M1+?

Accepted Answer

A)  $750 billion 
B)  $1000 billion 
C)  $1050 billion 
D)  $1550 billion 
A)  $750 billion 
B)  $1000 billion 
C)  $1050 billion 
D)  $1550 billion

Question 14

If the reserve ratio is 20 percent,how much is the money multiplier?

Accepted Answer

A)  2 
B)  4 
C)  5 
D)  8 
A)  2 
B)  4 
C)  5 
D)  8

Question 15

What is the average currency holding of Canadian dollars relative to Canadian population?

Accepted Answer

A)  $457 
B)  $1457 
C)  $2457 
D)  $3457 
A)  $457 
B)  $1457 
C)  $2457 
D)  $3457

Question 16

Table 10-2  
-Refer to the Table 10-2.If the reserve requirement is 10 percent and then someone deposits $50,000 into the bank,what is the bank's reserve position?

Accepted Answer

A)  It will have $75,000 in excess reserves. 
B)  It will have $52,500 in excess reserves. 
C)  It will need to raise reserves by $5000. 
D)  It will have excess reserves of $2500. 
A)  It will have $75,000 in excess reserves. 
B)  It will have $52,500 in excess reserves. 
C)  It will need to raise reserves by $5000. 
D)  It will have excess reserves of $2500.

Question 17

If you deposit $100 into a demand deposit at a bank,what does this action do to the money supply?

Accepted Answer

A)  It increases the money supply by more than $100. 
B)  It increases the money supply by less than $100. 
C)  It decreases the money supply by more than $100. 
D)  It decreases the money supply by less than $100. 
A)  It increases the money supply by more than $100. 
B)  It increases the money supply by less than $100. 
C)  It decreases the money supply by more than $100. 
D)  It decreases the money supply by less than $100.

Question 18

As the reserve ratio increases,what happens to the money multiplier and money supply?

Accepted Answer

A)  The money multiplier increases,but the money supply does not change. 
B)  The money multiplier does not change,but the money supply increases. 
C)  The money multiplier and the money supply both increase. 
D)  The money multiplier and the money supply both decrease. 
A)  The money multiplier increases,but the money supply does not change. 
B)  The money multiplier does not change,but the money supply increases. 
C)  The money multiplier and the money supply both increase. 
D)  The money multiplier and the money supply both decrease.

Question 19

Which of the following does M1+ include?

Accepted Answer

A)  currency 
B)  savings deposits 
C)  travellers' cheques 
D)  foreign currency accounts 
A)  currency 
B)  savings deposits 
C)  travellers' cheques 
D)  foreign currency accounts

Question 20

If the Bank of Canada buys bonds in the open market,the money supply decreases.

Accepted Answer

A) True 
 B)False

Which statement best describes the consequences of open-market sales conducted by the Bank of Canada?

Table 10-3 The following information pertains to the Bank of Kamloops. -Refer to the Table 10-3.If the Bank of Kamloops has loaned out all the money it wants,given its deposits,what is its reserve ratio?

Suppose the public decides to hold more currency and fewer deposits in banks.Which statement describes the effects of this decision?

Which statement best defines reserve requirements?

What is the difference between commodity money and fiat money? Why do people accept fiat currency in trade for goods and services?

During the early 1930s,there were a number of bank failures.What did this do to the money supply? The central banks advocated open-market purchases.Would these purchases have reversed the change in the money supply and helped banks? Explain.

Why was changing of reserve requirements phased out as a tool used by the Bank of Canada to control the money supply?

Bottles of very fine wine have less liquidity than demand deposits.

When Arnold uses dollars to record his income and expenses,how is he using money?

Since 1994,what was phased out as a tool used by the Bank of Canada to control the money supply?

If currency is $50 billion,chequable deposits $700 billion,other minor,less liquid categories $300 billion,and credit card debt $500 billion,how much is M1+?

If the reserve ratio is 20 percent,how much is the money multiplier?

What is the average currency holding of Canadian dollars relative to Canadian population?

Table 10-2 -Refer to the Table 10-2.If the reserve requirement is 10 percent and then someone deposits $50,000 into the bank,what is the bank's reserve position?

If you deposit $100 into a demand deposit at a bank,what does this action do to the money supply?

As the reserve ratio increases,what happens to the money multiplier and money supply?

Which of the following does M1+ include?

If the Bank of Canada buys bonds in the open market,the money supply decreases.

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, investment, and the Financial System

Unemployment and Its Natural Rate

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Small Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

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Exam 10: The Monetary System

Which statement best describes the consequences of open-market sales conducted by the Bank of Canada?

Table 10-3 The following information pertains to the Bank of Kamloops. -Refer to the Table 10-3.If the Bank of Kamloops has loaned out all the money it wants,given its deposits,what is its reserve ratio?

Suppose the public decides to hold more currency and fewer deposits in banks.Which statement describes the effects of this decision?

Which statement best defines reserve requirements?

What is the difference between commodity money and fiat money? Why do people accept fiat currency in trade for goods and services?

During the early 1930s,there were a number of bank failures.What did this do to the money supply? The central banks advocated open-market purchases.Would these purchases have reversed the change in the money supply and helped banks? Explain.

Why was changing of reserve requirements phased out as a tool used by the Bank of Canada to control the money supply?

Bottles of very fine wine have less liquidity than demand deposits.

When Arnold uses dollars to record his income and expenses,how is he using money?

Since 1994,what was phased out as a tool used by the Bank of Canada to control the money supply?

If currency is $50 billion,chequable deposits $700 billion,other minor,less liquid categories $300 billion,and credit card debt $500 billion,how much is M1+?

If the reserve ratio is 20 percent,how much is the money multiplier?

What is the average currency holding of Canadian dollars relative to Canadian population?

Table 10-2 -Refer to the Table 10-2.If the reserve requirement is 10 percent and then someone deposits $50,000 into the bank,what is the bank's reserve position?

If you deposit $100 into a demand deposit at a bank,what does this action do to the money supply?

As the reserve ratio increases,what happens to the money multiplier and money supply?

Which of the following does M1+ include?

If the Bank of Canada buys bonds in the open market,the money supply decreases.

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, investment, and the Financial System

Unemployment and Its Natural Rate

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Small Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

Filters